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The AUD/JPY pair starts the new week with aggressive selling, falling to its lowest level since September 2024, around 94.50 during the Asian session. However, spot prices have partially recovered intraday losses.
The introduction of tariffs on imports from Canada, Mexico, and China by U.S. President Donald Trump has heightened concerns over a global trade war. This has dampened investor appetite for riskier assets, bolstering the Japanese yen's status as a safe-haven compared to the risk-sensitive Australian dollar. Additionally, growing expectations of a rate cut by the Reserve Bank of Australia (RBA) this month are further contributing to the decline of the AUD/JPY pair.
Recent failures near the 100-day Simple Moving Average (SMA) have resulted in the formation of multiple tops on the daily chart. A break below the horizontal support at 96.00-95.90 has confirmed the bearish setup, opening the door for deeper losses.
Bearish oscillators on the daily chart indicate that the path of least resistance for AUD/JPY remains downward.
However, it is prudent to wait for further selling pressure below the daily low around 94.60 before initiating new bearish positions on AUD/JPY. A drop below this level could accelerate the decline towards the round level of 94.00, paving the way to test the September 2024 low in the 93.55 level.
On the other hand, the 95.55-95.65 level now serves as an immediate barrier ahead of the round level at 96.00. Any further upside towards 96.25 may be seen as a selling opportunity, with risks of a quick exhaustion near the 97.00 round level.
A break above this level could trigger a short-covering rally, pushing the AUD/JPY pair beyond the 97.20 resistance towards the horizontal resistance at 97.55-97.60.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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